Document Type
Article
Publication Date
6-2023
Keywords
Sourcing; manufacturing relocation; trade war; trade preferences; United States; China
Abstract
This paper examines the attitudes of multinational corporations (MNCs) toward the U.S.-China trade war through an original survey of China-based MNC subsidiaries in the manufacturing industry. Our argument is in two parts. First, firms that have relocated production outside of China or are considering such moves should be less likely to oppose the trade war as they possess outside options that reduce their vulnerability to trade restrictions. Second, firms’ tendency toward production relocation can in turn be explained by their local sourcing dependence, as measured by the level of such dependence and the degree to which their operations require supplier certification. This is because firms more heavily embedded in local supplier networks face stronger resource dependence that increases organizational inertia, reducing their ability to switch to alternative suppliers and therefore relocating production to other destinations. Our findings corroborate our hypotheses, highlighting how the heterogeneity in MNCs’ supply chain relationships may influence both their manufacturing relocation decisions and trade policy preferences.
Citation
Zeng, K., Xu, Y., & Xie, Z. (2023). Local Sourcing Embeddedness, Manufacturing Relocation, and Firm Attitudes Toward the US-China Trade War: A Survey Analysis of China-based MNC Subsidiaries. Business and Politics, 25 (2), 91-116. https://doi.org/10.1017/bap.2022.27
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.